Let’s find out who cut the coupon

Day by day, new revelations emerge surrounding the Co-op Bank, none of them edifying.

Mark Taber, who leads a campaign group of 1,500 of the bank’s retail bondholders, recently wrote to Andrew Bailey, chief executive of the Prudential Regulation Authority, protesting at Co-op Bank’s decision, on July 12, to suspend paying coupons to holders of its 13 per cent Perpetual Subordinated Bonds.

Mr Bailey has now replied and Mr Taber has published his letter. One part, relating to the coupon suspension, states: “… the Co-operative Bank has decided that the interest payment on the 13 per cent Perpetual Subordinated Bonds scheduled for 31 July 2013 will be deferred.”

Yet this seems to contradict the bank’s own regulatory statement of July12 , which stated: “… the Co-operative Bank confirmed that it would only pay discretionary coupon payments … with the permission of the Prudential Regulation Authority. The Bank announces today (12 July 2013) that such permission, after full consideration by the PRA, has not been granted in respect of the … coupon payment on the 13 per cent Perpetual Subordinated Bonds . . .”

In other words, the bank appears to suggest that the PRA ordered suspension of the coupon payments, while Mr Bailey’s letter implies that it was the bank’s decision. Some clarification would be most helpful.

Good deal in the making

The last time someone looked at buying RSM Tenon, they discovered a horrendous hole in its books. Months later, the accounting firm came close to collapse.

However, a potential takeover by Baker Tilly has a much better feel about it, not least because Tenon has been so cleaned up by its new management that further gremlins are unlikely to emerge. Shorn of its less savoury activities, such as providing advice on aggressive tax avoidance, it looks a much more attractive proposition if a deal can be reached with Lloyds, its main creditor, which has been keeping it on life support.

Although Tenon was created by the consolidation of five accounting firms in 2001, after which it expanded rapidly, at its heart has always been a solid SME practice. Harnessing that to Baker Tilly’s established local network promises to create a stronger mid-tier firm to compete with Grant Thornton and the newly merged BDO-PKF.

It may also place pressure on other mid-tier firms, such as Smith & Williamson and Moore Stephens, to contemplate mergers, even though the latter in particular has always foresworn growth just for the sake of it.

Render unto God 26.8% APR

Good morning, Vicar.

Ah, Mrs Tomkins. What can I do for you this fine morning?

I’d like one of your loans, please, Vicar. The ones I heard Archbishop Welby talking about the other day.

I see. Would you be so kind as to enter your personal details in our iPhone app, so we may check your credit history?

Oh, Vicar, you should know I can repay you. I put £5 in the collection every Sunday.

And, as part of the application, we shall need the details of your debit card, banking and mobile phone.

Mobile home? I live in a bungalow down the road, Vicar, you know that.

Now, Mrs Tomkins, our charges. As a credit union, we can charge you no more than 2 per cent per month on the reducing balance of a loan, working out at an annual percentage rate of 26.8 per cent.

Two per cent a month? I was hoping to repay you by evensong on Tuesday.

Or perhaps you would like one of our ten-year loans? They take longer to process, though, as we would have to secure the loan on your bungalow.

My bungalow?

Yes, Mrs Tomkins. Every year, many credit unions go under. And the FSA caught one last year in Glasgow that was giving its directors loans on better terms than those it gave its members.

Maybe I’ll just ask my son for a loan.

As you wish, Mrs Tomkins. Now tell me, what do you think of the extension I’m having built on the vicarage?

Big guns not silenced — yet

It is not only British corporates that have been reporting sparkling earnings this week. Some of the results from leading American industrial businesses have been outstanding, too, with the likes of Dow Chemical, 3M, Harley-Davidson and even General Motors yesterday either matching or outperforming Wall Street expectations.

Most striking, though, has been how well the American defence contractors have fared. The likes of Boeing, Lockheed Martin, General Dynamics, Northrop Grumman and Raytheon have all raised quarterly earnings despite the sequester in January that led to cuts in the US defence budget.

The contractors say this is reflects cost cuts already made. The worry must be that the Pentagon is yet to embark on serious belt-tightening.

A proposal that taxes credulity

The Business Select Committee has members, such as Nadhim Zahawi and Robin Walker, who understand business well. Sadly, they must have been out of the room when the committee wrote up its findings on the Kay review, because the report calls for an impact assessment of a financial transaction tax on equities.

Messrs Zahawi and Walker could have told colleagues that such a tax is a non-starter imposed unilaterally.

And besides, one already exists on UK equities: it is called stamp duty.